WAL-MART PLANS LAYOFFS, MANAGEMENT CHANGES IN U.K.

Samantha Conti / Additional reporting: Sharon Edelson

LONDON -- Asda, Wal-Mart Stores' U.K. division, plans to lay off 1,400 workers in a bid to cut costs and regain its share of the intensely competitive British market.

Some 200 management jobs will be phased out at the company's head office in Yorkshire, and 1,200 retail management positions at Asda stores will be cut in order to focus on frontline customer service. Asda employs 140,000 people and operates 256 supermarkets in the United Kingdom.

"It's as if we woke up, looked in the mirror and realized we'd gotten flabby," said Andy Bond, who took over as president and chief executive officer in March. "We have to get fit, and that's a painful process. Moreover, we don't want to gain back the extra pounds."

Bond said at a press conference last week that the costs of running a major retail chain were climbing at a dizzying rate. "Next year, fixed costs will be circa 20% higher than last year for all retailers. The treadmill for running a business is getting steeper."

The company also disclosed several management changes. David Cheesewright, 43, who served for 12 months as chief operating officer of Wal-Mart in Canada, will become chief operating officer and trading director at Asda. Cheesewright succeeds Bond, who left that role to become president and CEO. Cheesewright will begin Oct. 1.

Andy Clarke, 41, will return to Asda as retail director, a position he left in 2002 to work at Matalan and Iceland. Clarke, who will also be responsible for Asda's financial services business, will begin Sept. 1.

Angela Spindler, 42, will take on the new role of customer and strategy director on Oct. 1. She will be responsible for marketing, the Asda brand, customer service, format development and business strategy. She was formerly trading and marketing director at the store.

Asda revealed the cuts three days after Wal-Mart said comp-store sales in its U.S. stores rose 4.5% in June, exceeding the company's own guidance of 2% to 4%.

This marks Wal-Mart's biggest monthly gain in 13 months. The Northeast was the strongest region.